The VAT on Digital Services (VDS) online portal is now ready for access by non-resident digital service providers (NRDSPs). The development of the portal took longer than expected, so the NRDSPs needed to register for VAT using alternative routes prescribed by the Bureau of Internal Revenue (BIR).
The VDS portal is specifically designed for the simplified registration, filing, and payment of VAT by non-resident digital service providers. The Bureau of Internal Revenue (BIR) has published new guidelines and circulars that, in detail, explain the best practices for using the portal and extending its functionality.
Timeline
The deadline for VAT registration was June 1, 2025. Considering that the VDS portal hasn’t been operational until August, this should have been done via the ORUS portal. NRDSPs should have registered and filed their quarterly return via the VDS portal before August 5, 2025.
Impact of new policies
VAT on Digital Services
The mandate for non-resident digital service providers to collect VAT on Digital Services provided to customers based in the Philippines has been implemented by Republic Act No. 12023 and its implementing rules. The rules and guidelines elaborated in detail when it comes to the usage of the VDS portal, as well as the scope of the VAT rules for NRDSPs, cover a broad scope of different digital service providers.
This policy applies to digital services used, enjoyed, and exploited in the Philippines, where businesses provide the underlying service without a physical presence in the country. The Republic Act and implementing Revenue Regulations have in scope a broad spectrum of taxable digital services, for which supply NRDSPs are obligated to register and collect VAT.
The digital services that are in scope of the VAT rules cover, between other, companies that operate online search engines, like Google and Yahoo, e-commerce marketplaces like Amazon, eBay, Shopify Shop App, cloud service providers like Amazon AWS, Alibaba Cloud engine, social media platforms like LinkedIn, providers of digital products as Netflix, Spotify, and many more.
Tip: To learn more about the scope of VAT rules and regulations when it comes to VAT on Digital services for NRDSPs, you can consult one or more of the articles in which we have elaborated on this topic.
Framework of VDS Portal
The first step that non-registered NRDSPs need to take before registering on the VDS portal is to register for a TIN through the Online Registration and Update System (ORUS). After obtaining a TIN, the taxable person should open a business account on the VDS portal to complete VAT returns and make the corresponding payments.
Filing and Payment of VAT
Non-resident digital service providers should submit VAT returns quarterly and pay them by the 25th day of the following month. The Bureau of Internal Revenue has extended the deadline for submitting and paying the VAT return for digital services (BIR Form No. 2550-DS) for the second quarter of 2025, until August 5.
Compliance practices by BIR
The Revenue Authority can conduct various types of independent audits, utilizing information from other sources, such as data from payment service providers, to verify discrepancies between the reported sales data in submitted returns.
When BIR notices discrepancies, it will most probably, in the first instance, reach out to the non-compliant provider to rectify the situation in due time. If this doesn’t occur, it will initiate a tax audit, which will be followed by various types of fines and possible domain blockage.
Penalties
A non-resident digital service provider that fails to register for VAT shall be liable for penalties under section 13 of Revenue Regulation No. 3-2025, and suspension of its business activities under Section 12, when applicable.
How to stay compliant
- Review the turnover of your sales to customers in the Philippines
- Determine what type of transactions your business will handle
- Register when the threshold is reached
- Register on the VDS portal
- Submit VAT returns and make VAT payments on time
- Follow the Invoicing and Recording requirements.
Please contact us if you have any questions concerning the VAT registration process in the Philippines and your VAT compliance responsibilities for your business operations. Our tax team would be happy to assist you.
Takeaway
Cross-border providers of digital services should be aware that VAT on the Digital Service portal is now operative. They are obliged to register for a TIN and open an account on the VDS portal, which will enable them to submit VAT returns and remit owed tax in a simplified manner.
Author: Aleksandar Delic
Late registration, filing, and remittance will likely result in fines and penalties.
Indirect Tax Manager – E-commerce
Frequently Asked Questions
The VAT on Digital Services (VDS) portal is designed for non-resident digital service providers to register for VAT, file returns, and make payments for services provided in the Philippines.
The VDS portal became accessible in August 2025, after delays that affected the VAT registration process. NRDSPs were required to use alternative routes, like the ORUS portal, until then.
The VAT rules apply to a wide range of digital services, including online search engines, e-commerce platforms, cloud services, and digital products such as streaming services (Netflix, Spotify).
The Bureau of Internal Revenue (BIR) extended the deadline for filing the VAT return for the second quarter of 2025 to August 5, 2025.
Non-compliant providers may face penalties under Revenue Regulation No. 3-2025, including potential fines, audits, and suspension of business activities.
NRDSPs should regularly review their sales turnover in the Philippines, register on the VDS portal when necessary, submit VAT returns on time, and comply with invoicing and recording requirements.